No, not Newcomb College or Meissen, Mission Organic Center, Inc., 165 T.C. 13, filed 12/16/25, is a State-legal vegetation trafficker with a lot of expenses that Section 280E bars from Section 162 et seq. This KOs Mission’s OIC, while birthing five (count ’em, five) separate opinions in this full-dress TC, namely, viz., and to wit, a majority (Judge Buch, joined by Ch J.  Urda, and JJ. Kerrigan, Nega, Pugh, Ashford, Copeland, Jones, Toro, Greaves, Marshall, Weiler, Way, Arbeit, Guider, and Fung; concurring, J. Cland, joined by JJ Jones, Guider, and Fung; Judge Toro has his own concurring opinion, in which Ch J Urda,  and JJ Pugh, Ashford, Copeland, Jones, Greaves, Guider, and Fung join; Judge Landy dissents, joined by JJ Jenkins and (of course) Holmes; Judge Jenkins wants her own dissent in which JJ Landy and Holmes join; and last, but definitely not least, Judge Holmes has his own dissent, which Judge Landy joins.

Clear? Thought not.

This is a 9 Cir record-ruler off a CDP involving an OIC collectability (RCP) only, so abuse-of-discretion. And Section 7122(d)(1) gives IRS almost a free-fire zone.

“Mission argues that the Commissioner abused his discretion by disallowing business expenses when calculating Mission’s reasonable collection potential. Mission argues that IRM 5.8.5.25.2 (Sept. 24, 2021), Calculation of Future Income – Cultivation and Sale of Marijuana in Accordance with State Laws, is in conflict with the Code, Treasury regulations, and other IRM provisions. The Commissioner argues that the settlement officer did not abuse her discretion in rejecting the proposed offer-in-compromise and sustaining the proposed collection action. The Commissioner argues that the policy to exclude expenses that are disallowed by section 280E when computing reasonable collection potential is consistent with the congressional intent underlying section 280E and is consistent with the discretion granted by Congress to set guidelines for offers-in-compromise.” 165 T. C. 13, at p. 6.

IRS does not err in following an IRM policy that expresses what Congress has enacted: no deduction for herbal traffickers, hence no offset to gross income.

Judge Copeland says Mission filed and followed 280E for years, yet never paid the tax shown, essentially nullifying Section 280E. “..;.a taxpayer who files an income tax return consistent with section 280E, reports a tax liability, and then files an OIC stating the ‘actual money’ it earned was much less based on doubt as to collectibility, is arguing that it should pay a lesser amount in satisfaction of its tax liability than section 280E mandates. Such a taxpayer would be circumventing the underlying purpose of section 280E. I additionally note that such a taxpayer could likewise just default on the OIC the following year by filing consistent with section 280E, but not paying the amount due––continuing the pattern. Denying an OIC in these circumstances makes perfect sense, and the public policy outlined in the Internal Revenue Manual (IRM) is thus consistent with statutory intent of section 280E and would not wreak havoc on the OIC process.” 165 T. C. 13, at p. 14.

Judge Toro finds support for adherence to general policy in INS v. Yueh-Shaio Yang, 519 U.S. 26 (1996). Where an agency has a settled policy uniformly applied, even if invented, following it is not an abuse of discretion.

Judge Landy claims the wording of the NOD doesn’t reflect what the majority says it says, hence Chenery. And the special IRM rule for potteries falls foul of the general regulations for OICs based on collectability.

Judge Jenkins says the special rule in the IRM violates the regs as to calculating RCP, so relying thereon is error.

Judge Holmes says RCP is about what income (not taxable income) the taxpayer has after allowable expenses, deductible or not. The special rule for potteries flies in the face of this regulatory scheme.